Just days after Stratolaunch completed a taxi text of its giant aircraft that appeared to signal it was ready for its first flight, the company cancelled work on the launch vehicles it was going to carry. (credit: Stratolaunch)

A bad start to a great year

by A.J. MackenzieMonday, January 21, 2019

When 2019 started a few weeks ago, there were optimism about the year ahead. Blue Origin and Virgin Galactic would soon start flying people, many predicted, especially given Virgin’s successful SpaceShipTwo flight last month. Then there’s Boeing and SpaceX, who are scheduled to make their commercial crew test flights this year—just in time for NASA, since the clock is running out on access to Russia’s Soyuz. And then there are all the companies planning small launch vehicles that expect to make their first launches this year.

To be certain, Stratolaunch had always been an odd venture. Look up “quixotic” in the dictionary and you should see an illustration of that company’s giant plane.

Things aren’t looking so up now. The first few weeks of the year have been less about major achievements and more about major setbacks for high-profile commercial space companies. Maybe this is just an unfortunate coincidence of unrelated events, but it may also illustrate how fragile NewSpace really is.

To be certain, Stratolaunch had always been an odd venture. Look up “quixotic” in the dictionary and you should see an illustration of that company’s giant plane. For many in the industry, Stratolaunch appeared to be a solution looking for a problem—or sometimes still figuring out what the solution would be. First Stratolaunch was going to launch a SpaceX-built rocket, then one from Orbital Sciences, and then, last year, it announced it was building its own. Months later, that launch vehicle program is over.

Stratolaunch says it will still work on the plane, and eventually use it for launching Pegasus rockets. But the Pegasus isn’t in high demand given its high price. Will flying it on a one-of-its-kind giant plane really be that much more affordable than on one of the last L-1011 planes currently in service?

One of the factors in Stratolaunch’s change in plans is probably the untimely death last October of Paul Allen, who founded the company and provided all its funding to date. If he was still alive, would the company still be working on their own launch vehicle? But he evidently didn’t direct funding on the program to continue in his will, so who knows?

Allen was only the second-wealthiest person in the Seattle area to be backing a space program. Jeff Bezos, the world’s wealthiest man, has been funding Blue Origin for far longer than Stratolaunch was around. In recent years he boasted he was spending a billion dollars a year on Blue Origin.

Even if Bezos has to give up half his stake in Amazon.com, he won’t exactly be poor. But he’ll have less wealth to spend on Blue Origin and his other side ventures. If the value of Amazon’s stock goes down—say, because of an economic downturn—the situation could get even tighter.

The problem with Starship/Super Heavy is that it’s, well, super heavy: too heavy to have much demand for its full payload capacity.

Amid all that, Blue Origin hasn’t been moving very quickly. They’re planning a suborbital test flight of New Shepard this week, but that will be the first flight in more than six months, either because they’ve been facing technical problems or simply don’t have the resources, or incentive, to move more quickly. Some might argue it’s the latter since Bezos has taken the long view on this and other projects (such as the 10,000 Year Clock), but if his wealth is constrained he might start getting impatient.

Then there’s SpaceX. Hours after the company performed its first launch of the year, of the final set of Iridium NEXT satellites, SpaceX announced it was laying off about 10 percent of its more than 6,000 employees—577 alone at its headquarters and manufacturing facility. SpaceX said it needed to become a “leaner company” so it could afford to develop its Starlink satellite constellation and its Starship/Super Heavy launch system. “Either of these developments, even when attempted separately, have bankrupted other organizations,” the company said.

Both those programs are in their early stages: SpaceX launched two Starlink test satellites last year, and the first Starship “hopper” test vehicle is being built at the company’s Brownsville, Texas, site. Both will require billions of dollars to enter operations. Cutting 600 or 700 jobs won’t help that much.

SpaceX said the decision applied only to the prototype, yet local officials said that SpaceX had also cancelled plans to lease property at the Port of Los Angeles where, less than a year ago, they said they were going to build a factory for the vehicles. It’s not certain where the vehicles will now be built, if not in Brownsville, which doesn’t have the same aerospace workforce that Southern California has.

Both Starlink and Starship/Super Heavy are sort of odd programs, too. SpaceX is betting that Starlink will be so popular and lucrative it will generate massive profits that the company can then invest in its launch vehicle programs and Musk’s vision of Mars settlement. Lots of other companies, though, are planning their own broadband satellite constellations, suggesting competition that will drive down prices for customers and thus profit margins for the companies. In addition, there’s no guarantee any satellite system will be competitive with terrestrial alternatives, like emerging 5G wireless systems; recall it was terrestrial cell networks that took down the original Globalstar and Iridium two decades ago.

The problem, meanwhile, with Starship/Super Heavy is that it’s, well, super heavy: too heavy to have much demand for its full payload capacity. It was reportedly not of interest to the US Air Force, which declined to give it money, thinking that Blue Origin, United Launch Alliance, and even Northrop Grumman’s OmegA (amazingly enough) were better investments for next-generation rockets. There’s no commercial demand yet for anything that big; even the Falcon Heavy has struggled to win business.

Maybe SpaceX is betting that Starship/Super Heavy will be so cheap to fly because they’ll be fully reusable that they can fly mostly empty and still make money. SpaceX’s experience with reusable Falcon 9 rockets should make people wary about such claims, though.

As the saying goes, things are never as good as you think they are, but never as bad as well.

Also keep in mind that it was SpaceX’s successes that helped stimulate interest by other investors in the space industry. If SpaceX struggles, then those investors might think twice about putting their money into launch vehicle or satellite companies, just as those companies are looking for new, and bigger, funding rounds that they need to finish work on their rockets or satellite systems. An economic slowdown could also make investors shy away from such companies.

However, we could all be overly pessimistic here. Perhaps Stratolaunch’s plane will finally take flight in the coming weeks, which will at least be spectacular for avgeeks. New Shepard will fly again, and soon start taking people (and maybe Blue Origin will finally start selling tickets.) SpaceX’s Starship will start hopping above the Gulf Coast, looking like something out of the golden age of science fiction. As the saying goes, things are never as good as you think they are, but never as bad as well.

A.J. Mackenzie is a space policy observer who looks forward to seeing this century’s version of the Spruce Goose finally fly.

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